First Home Owners and FHOG

Never has there been more Government support for first home buyers in Melbourne and Victoria right now. That’s why it is critically important to understand all the Government first home buyer grants and schemes that are available.

These grants and schemes present a great opportunity to secure bonuses, start with lower than normal deposits and pay the lowest interest rates in decades. Also builders and land developers are offering bonuses on top of the government first home buyer incentives.

On the table are a range of packages. Each with different criteria. Let us detail a couple of things to help you understand how you can save on buying your first home in Victoria.

VICTORIAN GOVERNMENT SUPPORT FOR FIRST HOME BUYERS

First Home Owner Grant : $10,000 is available to eligible applicants buying or building a new home valued at up to $750,000 in metropolitan Melbourne. In regional Victoria, $20,000 is available.

Stamp Duty Concessions : First home buyers purchasing a new or established home valued below $600,000 will be exempt from stamp duty. For buyers of property over this price, concessional stamp duty applies.

FEDERAL SUPPORT TO FIRST HOME BUYERS

First Home Loan Deposit Scheme : Under this Scheme, eligible first home buyers can purchase a home of their own with a deposit as little as 5% (lenders criteria also apply).

First Home Super Saver Scheme : This scheme allows you to save money for your first home inside your super fund. If you can top up your super with up to an additional $15,000 you then use this money to be part of your deposit for your home.

HomeBuilder Grant : Eligible owner-occupiers (including first home buyers) can apply for a grant of $25,000 to build a new home or substantially renovate an existing home where the contract is signed between 4 June 2020 and 31 December 2020.

Call us today and we can work with you on how to accelerate your first home buying journey.

For more information talk to us at SDS Conveyancing Services, we have all the information you need to help you buy your first home.

Before we go ahead with explaining all about the process of conveyancing in Melbourne, let us first understand what conveyancing is.

Conveyancing refers to the sale of property or real estate from a vendor to a purchaser, it can also refer to the process whereby a mortgagor (Bank or Financial Institution) provides a mortgage to a mortgagee. The completion of the conveyancing process can take anywhere from 30 days to much longer depending on the type of sale eg. such as Off the Plan sales which can take over a year to go complete due to the nature of building.

HOW THE CONVEYANCING PROCESS WORKS

There are two sides to conveyancing, depending on whether you want to buy or sell a property. For buyers the conveyancer has the role of doing the following:

• They examine and revew the contract of sale and communicate the key terms to the client

• They watch over the timeline and keep up to date with deadlines

• They communicate with your bank to make sure your loan and funds meet the requirements for settlement

• The Conveyancer will calculate and inform you of the amount of Stamp Duty and Lodging fees you will need to complete the Transfer of Land

• They facilitate the settlement process whether it be online or in a face to face settlement room

For Vendors the conveyancer will do the following:

• Make sure that the vendors conform to the contract terms and conditions

• Keep track of deadlines and inform the client as to the progress

• Calculate the payment of any remaining owing mortgages on the property

• Prepare settlement statements

• Inform the relevant authorities such as water companies, council, State Revenue Office etc. of your sale

STEP 1 THE CONTRACT OF SALE

This involves the generation of the contract of sale, the legal document outlining the terms and conditions that both parties will agree to. This is one of the most important legal documents involved in the conveyancing process, which if not prepared properly can give rise to a dispute between the vendors and purchasers. Generally the contract of sale must contain specified documents, certificates, and disclosures detailing the property and any special conditions involved.

STEP 2 THE OFFER

The second step is making an offer to the property owner to purchase it. The vendor can accept the offer or they can enter into negotiations with the buyer over the price and conditions of the sale.

STEP 3 MAKING A DEPOSIT

Once negotiations are in place the purchaser can choose to pay an initial deposit to show that they are committed to the purchase of the property. This amount may vary and will be stated by the seller or conveyancer and is simply a step to show that the seller is serious about their offer as well. It is not a binding contract and neither is the property removed from the market.

STEP 4 EVALUATION OF ANY RISKS OR DAMAGE TO THE PROPERTY

It is the vendor's responsibility to check for damage to the property up until settlement or completion of the sale. The purchaser can be prudent by insuring the property from exchange of contracts if they are unsure whether the vendor has a current insurance policy.

STEP 5 EXCHANGE OF CONTRACT

In Victoria, the vendor and purchaser each sign one copy of the contract and then the real estate agent acts as the middleman who exchanges these copies between both parties. The exchange of contract signifies the process is underway and both parties are bound legally by the terms contained within it.

STEP 6 COOLING OFF PERIOD

After the exchange of the contract and a deposit is paid, the purchaser may have a cooling off period. If a cooling off period applies, the buyer can revoke the contract before the end of the cooling off period however at auctions, the cooling off period does not apply.

STEP 7 THE TRANSFER OF PROPERTY

In 2018 the conveyancing process in Victoria is done almost entirely online using the PEXA property exchange platform. The purchasers conveyancer will prepare a work space and invite all the relevant parties to join to begin the Econveyancing settlement process. If there is a special case and a paper transaction is required the purchaser’s conveyancer must prepare a transfer document and have the purchaser sign it. The purchaser’s conveyancer must then send the transfer document to the vendor’s conveyancer for the vendor to sign. This is often a requirement of the purchaser’s financier, so that it can register the transfer and its mortgage promptly. This means that the purchaser must arrange to provide their conveyancer with the stamp duty amount prior to settlement, or arrange for stamp duty to be paid at settlement. It is not possible to defer the payment of stamp duty on the transfer. Any other documents required must be signed and ready for settlement.

STEP 8 AGREEING ON THE SETTLEMENT DATE

The time for settlement can be set by agreement between the parties. If purchases have bought “off the plan”it can be quite lengthy, up to years in fact. The reason for this can be because the contract can only be completed after the building construction is complete and new titles are issued. These periods can be changed by agreement between the seller and the buyer.

STEP 9 OUTGOING MORTGAGEE

If the vendor has a mortgage over the property, the mortgagee must be contacted to provide a payout figure and attend at settlement to hand over a discharge of mortgage and, often, the certificate of title/title deed. In Victoria the process is done online through PEXA unless it is deemed a paper settlement under special circumstances.

STEP 10 ADJUSTMENTS

At settlement, adjustments like council rates, water rates, strata body corporate contributions, land tax, and rent will be calculated and the funds available figure (amount provided by the purchaser or their bank) will be used to pay the parties involved at settlement.

STEP 11 PRE- SETTLEMENT

The sale is said to settle or complete on the day the purchaser pays the balance of purchase money, to the vendor. On the day of settlement, it is important for the conveyancer to obtain a final search of the title to ensure that the property is clear from any interest or restrictions that may have been recorded between the date of exchange and settlement. This is a legal requirement under the conveyancing act, if settlement occurs and there turns out to be a caveat or warrant on the title this can stop the transfer of land being registered and legal proceedings will most likely be the result.

STEP 12 POST- SETTLEMENT

If it is an online settlement, money will be transferred through an EFT facility on PEXA and the vendor will receive the funds within minutes of settlement completing. If it is a paper transaction the purchaser or the purchaser’s mortgagee will pay Stamp Duty and then register the transfer documents with the Land Titles Office. Moneys are exchanged via cheques handed over at settlement in a physical location. The transfer documents consist of any of the following:

• discharge of mortgage

• withdrawal of any existing notice or caveats

• Transfer of title from the vendor to the purchaser

• mortgage from the purchaser to the new mortgagee. The Land Titles Offices advise the relevant authorities like the local council, water authority, and Valuer General’s office that the property has a new owner.

CONCLUSION

Whether you plan to buy or sell a house or business, a conveyancers role is to represent your interests throughout all the stages. When representing a buyer, a conveyancers work is to prepare and lodge all legal documents relevant to the transaction. A buyers conveyancer will also deal with the financial areas, including the placing of any deposit into a trust account, and undertake any adjustment calculations involving both taxes and rates.

When representing the person or entity selling a property, a conveyancer will review and complete all necessary legal documents and respond to any questions about the title, and deal with key matters the vendors have.

Conveyancing keeps you, a buyer or a seller, away from all complications of the buying and selling process. Hence, it’s always advised to contact a well respected and experienced conveyancer for your property related matters.

 

1. Obtaining Finance

The first and most important consideration is money! Without access to funding there’s no point in looking around for a house. When you’re applying for a mortgage or loan, banks want to know all about your income, your partner's income, assets, existing debts and liabilities to determine whether you’ll be able to repay the loan off. The higher and more stable your salary, the more likely you are to get the money. If getting a loan on your own seems like mission impossible, there may be ways to get a guarantor to get you over this hurdle.

2. Extra Costs and Fees

There are many other costs involved in buying a home, first home buyers will not be clued in on these extras and you'll need to know what your in for before jumping in. The first biggie is stamp duty, this is calculated by the State Revenue Office based on the consideration or purchase price of the house and can run up into the ten's of thousands, even hundreds of thousands! There are a few ways to reduce this tax such as applying for FHOG (First Home Owners Grant) or using the property as your PPR (Principle Place of Residence). There are other acceptable exemptions and concessions available that you can find out about by talking to a conveyancer or even contacting the SRO directly.  You will also need to know about Land Title fees, PEXA (electronic conveyancing) fees and some other costs that will need to be accounted for in your finance. Extra fees and costs can freak people out easily and it is wise to get in the know before you move forward.

3. The Process of Buying a Property

Buying a property can be very overwhelming and confusing, there is a lot of information you need to know before you dive into it. Knowledge and experience is the key to smart property buying, so if you’re new to the world of property, it’s wise to get expert advice, especially for the legal side of it. It may be wise to contact a few agents or conveyancers to find out what is involved with regards to the legal process before you begin. SDS conveyancing can go through it all with you one on one and explain the contract legalities with you to make sure your doing the right things in regards to process and steps.

4. Knowing what your buying

Buying property is a big step but although it is complicated it is also an exciting experience. So it’s important that buyers don’t get too caught up in chasing your dream home when making a potential purchase. Sometimes you can be deceived when looking at property and agents can pull the wool over your eyes with regards to defects, problems with the structure or things like mould, plumbing problems, pests, etc. Keep your wits about you when doing an inspection, and if you’re your worried about something consider hiring a building inspector to go thru the property with a fine tooth comb before committing to a purchase. This way, you know what you’re getting yourself into before you put your offer on the table.

5. Are you in the Right Place Financially?

So after doing some research and finding a property, are you ready to put down a deposit and get your finance into readiness? Can you budget the repayments into your life and still maintain your current lifestyle without sacrificing too much? Sometimes people jump into property buying without carefully laying out their budget because they get swept up in the excitement of it all, obtaining your dream home is the ultimate goal for many people and it is very easy to set aside the financial worries in order to just go for the goal. Consider carefully your current financial situation including your current debts, salary, job security, future and think long about if your ready to go forward with this huge step.